The markets have certainly left us all in a bit of a quandary this week. Whereas last week I felt that it would be just too easy if the head and shoulders patterns that everyone could see would play out, this week they have mostly been negated leaving us with a rather complicated situation.
Looking at the Dow again, note how we have managed to score a new all time high nullifying the possible head and shoulders top pattern. However, it does appear to be struggling on this rise. To give a better look I would prefer to see it have a bit of a correction here and then if it can take off again with some gusto, then we might have some hope of it continuing.
View attachment 3729032In the background we need to keep in mind that my Geniuses have shown their true value again by now being back up to 98% invested whereas just a few weeks ago when sentiment was so negative, they had half their money on the sidelines. One cannot help being cautious when this lot are all in.
As well, the CNN Fear and Greed Index which I have mentioned a number of times was sitting at levels that normally depict a low in the market – this week it has finally rallied up into what is described as Greed but not to max levels at 69. In January 2020 it was just up under 100!
During the week I included the rather fabulous ten cent point and figure chart of silver. For a slightly different aspect on silver, let’s have a look at PSLV the Sprott Silver Trust. This looks to be building a nice base pattern. Just a bit more work required to complete the pattern but overall, quite encouraging.
View attachment 3729035A couple of weeks ago I suggested following the Swiss Franc against the US dollar as a guide as to what the US Dollar was actually doing. As we can see from the updated chart of the Swissy, it broke the initial downtrend that was in place and how now run up to the longer term downtrend from the high earlier in the year. Once more we now need to see if the Swissy can go on to break this important trendline.
View attachment 3729038Although the head and shoulders top patterns in the US have been negated, it is possible to make the argument that the XJO could still be heading in that direction. Yes, it has broken its downtrend but it struggled all week to make any headway. An important week coming up for the Australian market.
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